How should YIAL account for the cost of planned checks and check to be performed at the end of the lease term?

YIAL is required to perform a planned check after every 1,00,000 hours of flight hours for each aircraft. This obligation is dependent on future circumstances. For example, YIAL may terminate the lease prematurely. Therefore, this does not lead to an obligation and therefore there is no need to make any provision for these checks. However, at the end of 12 years lease term, YIAL is obliged to carry out a final check irrespective of the number of hours actually flown by the aircraft. Hence, YIAL has to provide for these costs at the present value of expected costs. This provision has to be made at the beginning of the lease term i.e. in the FY 2024-25. The costs must be included in the cost of the right-of-use (ROU) asset pursuant to para 24 (d) of Ind AS 116.